On September 14, 2023, the Internal Revenue Service (IRS) issued a moratorium through at least the end of 2023 on processing new claims for the Employee Retention Tax Credit (ERTC). This is due to an increase in fraudulent claims that are being submitted.
The IRS is continuing to process claims received prior to the moratorium effective September 14th. The IRS has also noted that processing times associated with claims submitted before the moratorium are being processed at a slower pace due to an enhanced compliance review.
The ERTC has very specific criteria needed in order to qualify for the credit. To be eligible, employers must have:
- Sustained a full or partial suspension of operations due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings because of COVID-19 during 2020 or the first three quarters of 2021.
- Experienced a significant decline in gross receipts during 2020, a decline in gross receipts during the first three quarters of 2021, or qualified as a recovery startup business for the third or fourth quarters of 2021.
What Do You Do if You Are Awaiting a Claim?
The IRS continues to urge businesses to carefully review the ERTC guidelines to confirm whether the employer is eligible to receive the ERTC. If a claim has been submitted, and the taxpayer now believes that they do not qualify for the ERTC, the IRS has put in place an option to withdraw the claim if they believe it has been submitted improperly.
The IRS is working on developing new initiatives to help taxpayers who may have been the victim of an aggressive marketing campaign. The new initiatives include a settlement program that allows taxpayers to repay non-legitimate ERTC claims without penalties. Please see here for the official announcement from the IRS.
If you have any questions about processing your ERTC claims, please reach out to a member of Wolf’s Tax team.
